Opportunity Brewing

In this day and age (and perhaps in those past), the Coca-Cola Co. would catch hell – and then some – if it were to launch a cola product marketed to children. For a growing number of Americans, soda has become – in the non-literal sense – a four-letter word, and while it’s clear that more adult consumers want healthy drink options for themselves, they’re also increasingly wary of what their offspring are pulling from the fridge.

Tea, on the other hand, has long been a well-known and commonly consumed beverage, and ready-to-drink (RTD) versions have struck progressive chords with household buyers who view them as healthy alternatives to soda. In a category pioneered by companies like Snapple and AriZona, and since extended by dozens of other brands, including Coca-Cola-owned Honest Tea and Lipton’s Pure Leaf, RTD iced tea has been a welcome addition to households, with multi-serve packages filling grocery aisles, shopping carts and pantries.

The familiarity of tea as a family beverage, however, has yet to give way to the creation of many tea-based kids’ drinks. One significant barrier: caffeine, which is present in many tea leaves and may present too big a barrier for parents. That said, the category has, in recent years, seen the launch of a few caffeine-free kids’ tea brands, including Drazil, a line of herbal teas sweetened with fruit juice, Rooibee Roo, an extension of Rooibee Red Tea’s line of iced rooibos drinks, and Little Me Tea.

In a recent report on the U.S. tea market, Packaged Facts, a provider of intelligence and data on consumer products, urged beverage companies to take advantage of what it describes as an “underrepresented” sub-category of teas marketed specifically at kids and teens.

“According to Packaged Facts’ February/March 2013 Food Shopper Insights Survey, two-thirds of grocery shoppers with children agree that their kids’ preferences influence which groceries they buy,” the company wrote. “To win over the kids, ready-to-drink tea varieties are key to leveraging convenience. For example, liquid concentrates offer the opportunity to retain convenience, yet give kids the power to control their flavors and “play” with their beverage.”

Packaged Facts projects the American tea market to be a $25 billion category by the end of 2014, noting that growth will “depend heavily on the ability of food manufacturers and marketers to connect with children and their parents perhaps more than any other consumers.”

The development of new tea drinks for kids could also play a key role in the creation of a framework by which marketers can establish vertical integration of both adult and children’s products, according to Jonas Feliciano, an analyst with London-based market research firm Euromonitor International.

In a June blog post, Feliciano noted a growing number of new beverage manufacturers that are creating high quality, healthy children’s beverages based on trusted and established brands that could lead to long-term relationships with consumers.

Remarking on the success of Honest Tea’s Honest Kids juice drinks and Vita Coco Kids, for example, Feliciano saw wide-reaching potential to capture interest among young consumers as they grow.

“As the millennial generation starts to have families of its own, the ability to create brand equity with consumers before they have children could have ramifications that affect the next generation,” Feliciano wrote.

Feliciano also pointed to a gradual and sustained rise in the average age of first-time parents as giving way to more adults “entrenched in their own purchasing habits” and, often armed with a relatively high level of discretionary income, regularly seeking out new brands and products.

“The result is a growing number of consumers questioning the beverages they drank as children,” Feliciano said, referencing venerable brands like Ovaltine, Tang and Kool-Aid. “This is further exacerbated by the growing fears of obesity caused by high sugar beverages like carbonates and juices.”

And it is in the perception of tea as a healthy beverage, where marketers can most effectively reach millennial heads of household, and by extension, younger consumers, according to Packaged Facts.

“Tea marketers can win over the parent demographic by… leveraging tea’s healthful properties and perhaps even juxtaposing these attributes against other popular sugary kids’ beverages (i.e., sports drinks, soda), all the while underscoring ethical farming and production practices,” the market research film noted in its research.

Packaged Facts stressed that the ties between millennial consumers and an ever-evolving digital world are critical for tea marketers to understand and utilize to their benefit.

Drazil has followed this path in marketing of its kids’ tea drinks, whose company mission is “to foster healthy eating at an early age.” Its website is swathed with references to the benefits of tea, including the beverage being a natural source of antioxidants, minerals and vitamins, and includes a blog post that compares juice, a staple kids’ drink, to its line of teas. The verdict is, as expected, in Drazil’s favor, with the company noting that its products contain “50% less calories and 35% less natural occurring sugar than 100% juice.”

Along similar lines, Little Me Tea’s website includes the statement “some juices have as much sugar as a candy bar” and notes that its products contain 6 grams of sugar per 6.75 oz. juice box, a paltry number in comparison to the “average 26 grams of sugar in other 100% juice beverages — which equates to more than six teaspoons of sugar in just one serving.” The company goes on to list potential health risks associated with excessive sugar consumption, including obesity, diabetes and high cholesterol.

And while Drazil and Little Me Tea, like most kids’ brands, feature kid-friendly packaging adorned with colorful labels and imagery that will always capture a child’s eye, the tea marketers are betting that it’s a parent’s vigilance that will translate into sales from generations to come.